How Business Interest Gifts Can Multiply Client Impact
Over the years as an attorney, I’ve worked with a lot of businesses. Many of these have been family-run and family-owned businesses. According to a 2026 report from the U.S. Small Business Administration Office of Advocacy, about one in four employer firms (26.1%) were family-owned in 2022.
These are families who’ve been faithful to their business, their employees and the community that supports them through ups, downs and everything in between. Thinking about selling that business has important financial implications and can be highly emotional. The business can be like an extension of their own family. It’s their life’s work.
That’s partly why many of them choose to make a business interest gift as part of their preparation for sale: Giving a piece of their business to charity, rather than just giving cash, can be uniquely emotional and spiritual.
But it can also be a wise stewardship move. Giving a piece of their business rather than cash after a sale can result in significantly more dollars available to fund the family’s giving passions. I’ll even go further: It’s often one of the most high-leverage ways U.S. business owners can give.
Business interest gifts can be a catalyst for transformation in communities and provide an enduring impact and legacy.
The gift isn’t just symbolically significant. With business-interest gifts, it’s often more impactful than a cash gift. The available income tax deduction, combined with the charity’s tax-exempt status, often results in substantially more dollars going to charity.
Yet, despite the economic advantages, many business owners don’t know they can give business interests at all.
Beyond Cash: Giving Assets
Most people are familiar with donating cash to charity. But you can, in fact, give many non-cash assets.
The simplest version of these alternative gift strategies is publicly traded stock. Your client can gift shares of public stock to a charity and, as long as the shares have been held for at least 12 months, there’s an available fair market value income tax deduction. The charity can then sell that stock without paying tax on the gain, meaning all the sale proceeds can be used to further charitable goals. The same principles apply to limited liability companies, partnership interests, S corporations (S corps), C corporations, real estate and various other assets, though each entity type has its own tax considerations.
Of course, a gift of an interest in a private business has more nuances and complexity to navigate, but a seasoned guide can help navigate these, and the increased capacity for meaningful impact can be exhilarating—well worth the additional effort.
Changing the Timing of Gift
Imagine, for example, your client started a business. It’s grown a lot over the years through a steady investment of blood, sweat and tears. That client might be nearing the exit and preparing for a sale in the next year or so. They’re going to have a lot of taxable gain wrapped up in that business and, consequently, a large tax burden after a sale.
If they’re charitably inclined, they might choose to sell the business, pay the taxes and then gift cash from the proceeds. But if, instead, they change the timing of their giving, for example, by donating an interest in the business a sufficient amount of time before a potential sale, and if they take care to follow other strict rules, they can often significantly increase the dollars to charity.
That increased capacity for impact can be a beautiful legacy of the business for years to come. A gift like this must be made well in advance of any agreement to sell, so they should raise the possibility of a gift with their tax advisors as early as possible.
The best candidates for business interest gifts will be good candidates both as individuals and as businesses. Business owners interested in making a gift must be charitable. They’ll be giving up value when they make a gift, so this isn’t a solution for someone who’s just looking to reduce taxes.
A gift will cost them, but it can empower them to have an impact beyond what they ever imagined possible.
An important part of business gifting is the preparatory work. Preparation includes obtaining a qualified appraisal, which is required for gifts of closely held business interests. It’s never too early to talk to your clients about the possibility. The year leading up to a business sale is a good time to begin more serious preparation and analysis.
Multiplying Impact
A business interest gift is a powerful charitable tool, but an uncommon and complex one. It can feel like uncharted waters, not just for business owner clients but also for you as their advisor. In nearly 15 years as a business attorney in private practice, I worked on just one or two such gifts. But in five years at the National Christian Foundation, where I now serve as a gift planning attorney, I’ve helped complete nearly 500 such gifts.
We strive to adapt to where each giver and their team is, pointing out pitfalls and opportunities along the way. Compared to giving public stock, gifts of closely held companies involve many more nuances and potential hazards. Certain business activities and business characteristics are more attractive for gifting. The legal structure can have implications on the ability to make the gift, the available charitable deduction and whether the charity pays tax on a subsequent sale.
Yes, a charity can own S corp stock and LLC interests, but each has its own nuances. Sometimes, business partners have to be educated and get comfortable with the idea of a gift. There are a variety of traps for the unwary. But all of these can be navigated by an experienced team, and the resulting impact can make the effort worthwhile.
Business-interest gifts can greatly expand the owner’s giving capacity by changing how they give.
If your client or someone you know is considering a sale, think about whether a gift like this might be right. Become a generosity champion. In doing so, you can help unlock meaningful generosity that can create lasting impact for generations to come.
